I am a Certified Divorce Financial Analyst™ and the author of the Amazon best-selling books, Divorce: Think Financially, Not Emotionally - What Women Need To Know About Securing Their Financial Future Before, During, And After Divorce, Volumes I & II. My books are available on my website ThinkFinancially.com. I am also the founder of Bedrock Divorce Advisors, LLC, a divorce financial advisory firm that works exclusively with women throughout the United States, and the creator of ThinkFinancially.com, a website created to educate, empower and support women before, during and after divorce. In addition to my weekly blog for Forbes.com, I also contribute articles regularly to The Huffington Post, DailyWorth, More.com, Lawyers.com and many others. I have been extensively interviewed about the financial aspects of divorce for women by CBS and FOX Television News and such prestigious publications as The Wall Street Journal, Dow Jones, The Miami Herald, Smart Money, Consumer Reports, The Christian Science Monitor, and many others. I earned my BA degree in psychology from Columbia University and studied law at Pace University School of Law before becoming a divorce financial advisor. All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney. Landers@BedrockDivorce.com

Good News For Divorcing Women: Credit Reform, Reformed!

It might be the understatement of the century to say that government doesn’t always work the way we’d like it to. Sometimes, well-intentioned legislation can cause unforeseen problems. But, happily, in our democracy these oversights eventually can be corrected. For instance, let’s take a look at a recent example which is especially relevant for divorcing women.

When the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) was passed in 2009, the idea was to improve the way the credit card industry treats customers, and also to prevent consumers (especially college students) from getting into serious financial trouble by racking up credit card debt they could not afford to pay. These were popular goals, and the bill passed with strong bipartisan support in Congress.

However. . .

One provision of the CARD Act prevented people from obtaining credit cards on the basis of family income, when that income was not individually theirs. As a result, “at-home” spouses without paid work, who would likely have been approved for credit cards before the CARD Act went into effect, suddenly found it difficult to obtain credit in their own names, despite high family income and strong individual work and credit histories. Women who had put their careers on hold to care for their families, and later found themselves divorced, were especially vulnerable to the serious financial problems a lack of credit can cause.

Here’s the good news:

The Consumer Financial Protection Bureau (CFPB) has just announced that credit card issuers will now be able to consider the income and assets of a spouse or partner when evaluating a person’s credit card application, if the applicant is at least 21 years old and has “reasonable expectation of access” to said income and assets. The change will go into effect within six months. It applies to millions of “stay-at-home-Moms” who were, inadvertently, negatively affected by the CARD Act.

Note that the CFPB’s new rule doesn’t say that a credit card company must consider spousal income when deciding whether to issue a credit card, but just that they may. In the past, we’ve seen credit card companies make out well by issuing cards regardless of a consumer’s individual ability to pay – in part, that’s what created the need for the CARD Act in the first place! Still, be aware that you may have to apply to more than one company before you’re able to obtain a credit card in your own name based on family income.

You may also be wondering how a pending divorce could affect your “reasonable expectation of access” to family income. In my view, this is all the more reason for women to maintain credit cards in their own names throughout their marriage, rather than wait until divorce is on the horizon and scramble to establish credit then.

I always –and strongly –advise women to maintain their financial independence when they marry. In my years of professional experience as a Divorce Financial Strategist™, I’ve seen far too often what can happen when women don’t have funds or credit in their own name. If your husband wipes out joint accounts and you don’t have your own money, you might not be able to hire a professional divorce team to manage the process with your secure financial future in mind.

Divorce can tie up all your available cash. Without credit in your own name, you could also be unable to obtain loans or credit cards to manage living expenses. We rely on credit for so many of the financial aspects of our lives, large and small – from obtaining mortgages and other loans to paying for everyday needs and wants. Take a moment to imagine going through your day without good credit. How soon would it be before you couldn’t function? No matter what our income or assets, some of us wouldn’t make it past the gas pump on the way out of town. Without credit, eventually you can’t buy groceries… and if your favorite thing to make for dinner is reservations, you’ll certainly run into trouble there as well.

Women who’ve put their careers on hiatus to care for their families may need time to update their skills before re-entering the work force —assuming they are young enough and still can. Even when they do, it may still be years, if ever, before their income is comparable to what they earned when they set aside paid work. Some clients who’ve made this sacrifice for their families tell me they did it willingly, in mutual agreement with their husbands. Others say they did it because of their husbands’ insistence and/or because they felt pressure from his family. Many of these women now have regrets that they didn’t go back to work earlier or didn’t work part-time to maintain some job skills, put away money and invest in 401K plans, etc.

I can’t stress enough the importance to women of maintaining both credit and money in your own name, even in the happiest of marriages. But especially if divorce is in your future, the CFPB’s decision to restore access to credit for spouses without individual income comes as very good news indeed.

All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.

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